One of the things Robert Kuttner’s Debtors’ Prison does well is it ties together many of the individual fights progressives are battling over into a general argument for why our economy is broken 5 years after the Great Recession began. There are those fighting both Republicans and some Democrats on topics ranging from austerity to foreclosure relief and financial sector accountability, while there are fellow activists in Europe fighting against the European Central Bank’s policy of tight money and anti-democratic takeovers of local policy.

Kuttner’s book uses debt as the key entry point into what is going on. Early on he jokes that a book called “Debtors’ Prison” in this intellectual climate would likely be a book about how Social Security and President Obama are robbing young people of their prosperity. Instead Kuttner pulls together a common narrative among liberal economists – that a balance sheet recession of collapsed housing debts is holding back the economy – and builds it out in a historical context. Detailed stories of Daniel Dafoe’s experience with creditors to the history of the United States’ bankruptcy code populate the pages of this book.

In this story an increase in government debt is necessary to counter private sector deleveraging This is even more important with the Federal Reserve at the zero lower bound, trying unconventional policies to boost the economy. With the “fiscal multiplier” in effect, more spending helps the larger economy, while austerity cuts even deeper than it normally would; also finding a way to write down bad debts, a move avoided by both the Tea Party and the administration at key points, would help the economy.

Another thing the book does very well is filling in a lot of the conversations that go missing here. Building off an excellent 2011 American Prospect piece, which argued that debt politics ”pits the claims of the past against the productive potential of the future,” Kuttners’ book is one of the best at pulling together how our history of debts are playing out in the current environment. Both political philosophers abstractly, and political operatives practically, spend a lot of time arguing about how the pie of economic growth should be divided. This was the kerfuffle over the “you didn’t build that” comment from last year.

Neither, however, spend much time arguing about how we should think of what happens when things go wrong. Kuttner shows how the law shifts so that those who take over companies can find it easy to remove pensions, while consumers who are struggling to get by can’t discharge housing debt or find their medical bills coming into contact with the criminal justice system. This is an underexamined part of current economic life, and Kuttner has an excellent overview of it.

The final excellent thing about the book, which is a happy accident, is how well timed it is. Right now, between the IMF and general consensus pushing back against austerity, the Reinhart/Rogoff argument about debt cliffs collapsing and concerns about the US government’s deficit collapsing too quickly, it seems like the arguments of Debtors’ Prison could find a greater audience — especially among people who want to understand how both the collapse happened and why the recovery has dragged on so long. The orthodoxy of austerity that took an intellectual hold after 2011 is starting to collapse. But will that turn into any kind of political action?

Join me to discuss the book with Robert Kuttner.

[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions. Please take other conversations to a previous thread. - bev]

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Bob, I have not had an opportunity to read your book so forgive me if you address this in there but why does it seem so many people in DeeCee are willfully ignorant about the effects of debt on the individual and the economy as a whole? Do they think that hounding people into bankruptcy and real life prisons is going to make things better? Or is this the Prison Industrial Complex married to the banking system to keep the wage serfs down and tethered to the meaningless and low paying jobs?

Hey Bob – to get started, how would you explain the current situation that the United States and Europe finds itself in? Especially when compared to commonplace narratives about how things are struggling because of high government debts, or structural problems in the labor force, or “uncertainty”?

Both countries are dealing with the aftermath of a financial collapse. In such circumstances, purchasing power is depressed, and austerity is the worst policy you can pursue. But you’ll note that banks and corporations are doing just fine. So austerity serves elites, even though it harms everyone else. Structural problems in the labor force did not cause the collapse–it’s just a handy alibi for financial elites that scapegoats working people

So since the president declares that the banks have committed no crimes and the justice department gives the banks a free pass so that they can steal some more, how do we break their power (and the power of the other multi-national firms destroying the earth, the economies, etc)?

Hey, thanks! The debts and deficits in all of our countries were entirely manageable until the financial collapse sandbagged the economy. To blame the resulting slump on deficits has things exactly backwards. The collapse caused the deficits, not vice versa.

It’s remarkable how clear the story is once it is put out there, and also remarkable that so little action is taken. Where are some places you think we’ve gone wrong? And why is that – some argue some elite directly benefit from the chaos, while others argue that it more reflects a broken government structure? What is your take?

“Deflation” is not a word you hear any too frequently these days [rather "scary, scary inflation"], so it was interesting to read your explanation: how deflation comes about and what the effects of it are.

Again, this is just not an issue that’s dealt with AT ALL these days, and yet you’ve demonstrated how important it is.

I don’t think we break their power until we elect a government that’s on the side of regular people and not bank-sters. What’s appalling about 2008 is that the stage was set for a counter-revolution against bankers comparable to Roosevelt in 1933. The bankers and the theory of laissez-faire were in disgrace. But Obama went and appointed one protege of Bob Rubin after another, so we never got the pendulum swing–and a lot of the anger against the banks was appropriated by the Tea Parties. So we need at least one progressive party in this country.

At the launch event for my book, with Joe Stiglitz, an audience member berated us for trying to convince the other side. We agreed that the point is not to persuade Wall Street, but to limit their power.

Obviously I agree with you about the EFFECT of all the financial abuses in CAUSING the crash. I’m hoping that we’re at last moving towards a place that the public will be more open to this idea. It seems like a good time to push this issue hard. Folks can see how horridly the banks behave; let’s follow up with some “these laws won’t let them get away with that again.” [Thank you Brown & Vitter.]

I was also interested in your history of bankruptcy as both a tool of egalitarian reform as well as a way for corporate elite to protect their own interests over time. Can you give us the elevator pitch on why this matters?

It’s worth noting a progressive hero quick to the scene, Elizabeth Warren, is also one of the country’s major bankruptcy experts. Why do you think this doesn’t get more interest?

Thank you. Creditors (banks) see ghosts of inflation everywhere. But when purchasing power is flat and there is a lot of idle human and physical capacity in the economy, there is no inflationary pressure. But Wall Street would prefer continued low level depression (deflation) to the slightest risk of inflation. It’s gotten so bad that the most progressive outfit in town these days is the Federal Reserve! Not because Ben Bernanke has become a Bolshevik, but because he actually has some understanding of the Great Depression, and apparently plans to go back to Princeton, and not to Goldman or Citi like most of the Rubin crowd advising Obama.

You mention Obama as a figure that people thought would be the populist progressive to revolt against corporatism, but it became quickly evident with the dying public option and the wishy-washy Dodd-Frank framework, within the context of numerous revolving-door appointments and Rubinite advisors, that he was not the man for the job.

My question is, did Obama fool us? Did DC corrupt him? Did Obama have a change of heart? Was he in over his head? Inexperienced?

And a second question: have we lost the momentum that the financial crisis gave us to get the reforms needed in the banking system as well as the tax code that drives inequality? Will the memory of the deregulated catastrophe be too distant to prompt we the people to continue to demand the change necessary?

I think bankruptcy is a little bit esoteric as a topic. When I was researching Debtors’ Prison, what screamed out to me was the double standard that the executives who drove a corporation into the ground, or the private equity guys who hollowed it out, get to declare Chapter 11, screw the pensioners and other debtors, and keep control. But no bankruptcy relief for students, homeowners or Greece. We need a modern Jubilee movement. The obsessive focus on public debt has it backwards. We should be discussing how to relieve other debt. Also, countries should be able to declare bankruptcy and shed debts, just like corporations.

Later in the book Bob takes up the story articulated in the movie Heist: Who Stole the American Dream and Hedrick Smith’s book of the same title: that Pete Peterson and his ilk have worked for 40+ years to obscure the real story, and to provide their bogey men answers ["need to cut social security to reduce the debt," "can't tax the job creators"].

But I totally agree: the brilliance of the book is how clearly it explains what is really going on, how it distinguishes, for example, among various “kinds” of “debt,” how it presents facts many of us have never seen.

All of the above on Obama. But he was part of a system where all the power reposed in Wall Street. He would have had to be even nervier than Roosevelt to challenge it, and that wasn’t who he turned out to be.

I’m curious about where you see the United States going from here. You discuss a topic called “financial repression” at the book’s conclusion – I was wondering if you could discuss what it is (and isn’t), and why it might be important for future policymaking.

I’m curious about where you see the United States going from here. You discuss a topic called “financial repression” at the book’s conclusion – I was wondering if you could discuss what it is (and isn’t), and why it might be important for future policymaking.

Roll up a bunch of bad debts as business: you’re a “job creator,” “entrepreneur,” whatever and it’s good social policy to forgive YOUR debts.

Roll up a bunch of debts because of over-priced college tuition, exorbitant medical expenses, or your inability to pay your mortgage because you lost your job: BAD person. No bankruptcy relief for YOU!!

“But I totally agree: the brilliance of the book is how clearly it explains what is really going on, how it distinguishes, for example, among various “kinds” of “debt,” how it presents facts many of us have never seen.”

For those reading, I write and study this stuff day-in and day-out, and I learned quite a bit about where everything is coming from and where it is going. So I’d give a similar recommendation. For the general audience, what stuff stood out the most Mauimom?

Well we know Biden and Clinton aren’t going to do anything either, so what hope is there for any chance whatsoever — either to the tax code to help reduce inequality, or to labor laws/stimulus to help rebuild the middle class, or to wall street reform to detoxify banking — in 2016-beyond?

Should we all basically just give in to the fact that in the near future we’ll be fending off right-wing teahadists whose economic marginalization they blame on the government rather than corporatism?

Bruce Bartlett and Bill Moyers have called the United States a “plutocracy” — others have called it an outright oligarchy (Chris Hedges and other less-mainstream individuals).

We need to reduce the power of banks and bankers, both within the economic system and in politics. Right now, the main function of the financial system is to feather its own nest, not to serve the economy. If we continue on the same course — budget cuts, no real reform of banks — we risk a decade of low level depression and another financial bubble and crash. So we need both progressive organizing at the base and progressive leadership from our elected leaders.

I thought you made an interesting point about overburdened people being faced with a Hobson’s choice: reduce purchases [often of essentials] to keep up with the payments on your debt vs. default and have your collateral [assets] seized and sold at a depressed price.

In the short-term, this leaves us an agenda to stop austerity, boost demand, and combat the power of the banks. And there’s some agenda items for this (end sequestration, direct job programs, higher capital requirements and a serious Volcker Rule).

I’m curious, especially as you look to 2016 and beyond, where left-liberals should be focusing their eyes on the medium-term agenda for issues surrounding the economy and government.

Wouldn’t that require some kind of a shock? Either another financial crisis (perhaps a stock bubble burst) or something along those lines?

And how do you feel about the way money has infiltrated the process (not just politically through Citizens United, but also the way big money like Kochs and the internet creates the “right wing bubble/echo chamber”)? Lawrence Lessig doesn’t seem to think change can come about until we reform money in politics, and once we do that, it will allow for movements to gain more traction.

That’s the right agenda. And the “Volcker Rule” against banks engaging in trading of risky assets has just about been destroyed by industry lobbying. We needed something like the original Glass Steagall that couldn’t be gamed.
So – for 2016: a green public investment agenda for jobs and economic stimulus. And a drastic shrinkage and simplification of the financial system.

1) laying out the reasons why Peterson and his ilk hate deficits and social security [I knew about "we want the fees from investing your money" but hadn't thought about "social security demonstrates that government works effectively, contra to what the Peterson crowd bleats"];

2) the different “types” of debt. How they’re often co-mingled in the public’s mind [and in the minds of the pundits]but how each has a different cause & effect;

3) “70% of banks’ profits come from securities creation and trading” vs. where the profits of small or community banks come from. The effects of this.

4) the effect of deflation [and other forces] on wages.

5) as noted above, that the lack of regulation, and the resulting financial abuses, are what really caused the “crash,” not “loans to people of color” or “people taking out HELOCs and buying big-screen tv’s.”

Finally, THANK YOU for criticizing the oft-used term “The Great Recession” and pointing out that is NOT a “recession” but actually a “Lessor Depression” or “Great Deflation.”

Well, I’m proud that most got it right. I think “Obama’s Challenge” (2008) which predicted both the collapse and Obama’s election and warned of the risk that he’d be captured by Wall Street, was a little too hopeful of the possibility that he’d be another Roosevelt. The Life of the Party (1987) was hopeful that an actual progressive might be a Democratic president. I guess I have a bias toward hope, as Albert Hirschman famously put it. If I didn’t, I’d slit my wrists.

Yes, those are the important points — and the fact that the bubble economy was the direct result of people’s wages not keeping up with either the cost of productivity or inflation, while Wall Street induced them to borrow against their homes. The result was an unsustainable “private Keynesianism.”

It’s a vicious circle to be sure. Money dominates politics, and the resulting policies reinforce the regime of money. I think the only way to break into the circle is for regular people to get organized and make sure that the next round of politicians aren’t just stooges for Wall Street,

Bob, this whole book is so SENSIBLE. While it’s understandable why Peterson & his paid lackeys [and there are LOTS of them!!!] wouldn’t “get it,” why can’t others in this area see what you’ve so sensibly laid out?

Stupidity? Inability to break away from traditional thinking? Fear of not being part of [and agreeing with] the “in crowd?

And is Obama really so STUPID that he believes this dreck, or is he just evil like Rubin et al? I don’t see him touring th”edical expenses, whose kids are crushed by student debt and living in the basement, unable to find a job.

I get the feeling he NEVER has contact with anyone other than his “best and the brightest,” and THEY certainly don’t have these problems.

What are the numbers on people with home debt for example but the house is worth less than what is owed on the loan? What percent of people have just walked away from that debt and is that number going up or down.
Same question only about medical debts which unlike home debts really can’t be avoided or planned for in most cases.

As we come to the end, I’m interested in what you found genuinely interesting, or thought-changing, while researching this book. I imagine FDL readers keep track of, say, the debates over austerity, and know many things about where the economy stands. Your book places it in a complete history of the moment but also a longer history across time – that must have required a lot new research, and I wonder what surprised you.

Throughout most of the crisis, roughly 25% to 33% of people with a mortgage are underwater. There’s been surprisingly little “strategic default”, maybe 10% of all default, and even then the numbers are very difficult to understand. The debts are sticking, and they have dragged down the economy.

If we continue on this trajectory of having huge amounts of debt assuming no further shocks to the economy can we ever get a good economy?
How big does an economic shock have to be in GDP terms to sink our economy? Example lets say we invade Iran and have $10 gas for 6 months and GDP dropped 10% would that do it?

As someone who’s halfway into retirement, it seems to me that the current “keep interest rates low” policy also serves to push the elderly towards riskier stock investments [and the related fees]. The “return” from those safe CDs doesn’t beat inflation, so there’s a temptation to look elsewhere.

If we were to decide together, to refuse to make payments to a particular creditor as a show of power, the power of the powerless, if you will, we who have nothing might easily drive one of the axis-of-evil, out of existance.

I think we’re fast approaching the time when most of us are going to have to choose to forego payment on something anyway, so why not band together to make our decision meaningful?

Great questions, Mauimom! I think he has always been a conciliator, he likes to be liked, he gravitates to where the power is, and Wall Street sure has the power. As an outsider, he could have governed like a true outsider and brought in a whole new team (like Konczal!) but instead he ingratiated himself with the old crowd who caused the collapse. In the first three months of 2007 — 07, not -08 — when Hillary was trying to scare everyone else out of the race because of her supposed inevitability, Obama raised more money on Wall Street than she did. That should have been a warning. The investment bankers and private equity thugs who wanted to be with the cool kids liked Obama and thought of themselves as social liberals, but accurately perceived that he’d do their bidding. So we get progress on the social issues, but Wall Street is more dominant than ever, and then working class guys react against both the cultural liberalism and Wall Street screwing them economically.

I agree with everything you say about the economics, but I think we are well past the tipping point with respect to political correction. Obama drove a stake into the feeble heart of American democracy. I know we should never give up, but the future looks pretty bleak. Our next president is likely to be a failed general (name your pick).

I don’t see Obama touring the country, talking to people who’ve lost their homes and or/job, who’ve been hammered by gigantic medical expenses, whose kids are crushed by student debt and living in the basement, unable to find a job.

Despite the supposed recovery of housing 22% of homes still have mortgages worth more than the house. Obama’s programs are helping only a small fraction of these people. I don’t know how many just walk away, but the number who have lost their homes is well into the millions. Medical debt forces people into household bankruptcy, but under the rules of the law that Bush II signed in 2005, they don’t get to walk away like corporations. Most have to keep paying

In this story an increase in government debt is necessary to counter private sector deleveraging

The bank bailout saved the banks but kept consumer’s debt levels on homes for example unnaturally high. So in practice there was no debt reduction for consumers.
How long can the banks hold out with homes that won’t sell and are not likely to sell at prices to cover those debts. Remember inflation and interest on unpaid home loan debt is only going up.

The surprise was to realize that the ground rules of debt have been a contentious issue for 300 years and really back to antiquity, and that with rare exceptions like the Roosevelt era the rules are usually rigged in favor of the big guys. I sort of knew that. The fun was nailing down the detail

But a lot of the banks have created a bag of tricks that keep the properties [whose value is less than the mortgage on it] OFF their books: they don’t complete a foreclosure and release the debtor. Debtor retains “title” and can’t get rid of the damn property, is fined by the municipality for uncut weeds, vandalism, etc. All because the banks DON’T want these lousy properties on THEIR books.

Hillary listens to the same advisors, but she’d be a much tougher negotiator with the Republicans Beyond having a bad sense of how the economy works, Obama is a lousy tactician. He has been leading with his chin in the budget talks. The wanting-to-be-liked thing again.

But, what do you say to those who insist that “we need people with relevant experience” — it’s the go-to talking point whenever nominees for key positions are being discussed. What sort of balance do we need to strike between an individual having the expertise and experience, but who has the public interest in mind?

Would it be wrong to look toward Academia to fill the void, since getting the private sector experienced people hasn’t been working out?

On that token — Mary Jo White — is she like a Joe P Kennedy insider who will shake things up, or just another revolving door stooge who will keep her longer career goals in mind during her tenure?

The investment bankers and private equity thugs who wanted to be with the cool kids liked Obama and thought of themselves as social liberals, but accurately perceived that he’d do their bidding.

I don’t think the equity thugs and investment bankers are at all concerned with social status, being “with the cool kids” as you say, they’re utterly adept at maintaining a facade of top-notch social skills and all the while keeping a basement full of dis-membered bodies and sex slaves.

Obama isn’t a ‘cool kid’ he’s a sociopath like his W$ buddies.

Having had recent and significant experience with a skilled sociopathic crook, I can tell you that the illusion of charming humanity is the single most shocking part of the whole episode.

Good question about White. We’ll see. Joe Stiglitz and plenty of experience and expertise. But he was far too tough on Wall Street to be appointed. Likewise Krugman. Volcker (!) was too critical of the banks to be appointed to more than a token job. There are plenty of knowledgeable people out there – Sheila Bair, Brooksley Born.

The thing i don’t get about Obama’s lack of negotiating skills is that he’s going to get labeled as a marxist socialist muslim etc by the right-wing no matter what he does, so what is the point of capitulating in all these negotiations just to aim for a grand bargain, and lose all the progressive points?! He may as well actually put forth some serious radical reforms and earn the labels he’s getting from the Teapublicans.

How has state-and-local level politics played out in the United States? I think they are polarizing in a terrible way that will have long-term consequences, but I’m wondering what you make of it under the Debtors’ Prison thesis.

One can psychoanalyze Obama, but don’t forget that he is the third pro-Wall Street Dem president in a row, and Clinton and Carter had very different demons. But as politicians, they all responded to the vectors of political forces, and the prevailing winds were and are blowing from Wall Street.

That assumes, however, that he really BELIEVES in the “progressive points.” I think an awful lot of us have come to believe that Obama really LIKES those right wing positions he always “caves in” to. He certainly likes the guys who propose them [see, e.g., Bowles, Simpson, Dimon et al.]

Interesting got any links? Also I suspect that Wallmart financed its expansion into China and South America by using stock based on the prices of their stores both open stores and closed “ghost stores ” based on commercel real estate values pre economic collapse.
Same with Rupert buying the WallStreet journal but the banks are not demanding more shares of stock or cash to reflect the true declining values of the assets they hold like they did with Enron.
Enron collapsed under the weight of the banks demands.
Also just how the hell is Bain Capital selling bonds to keep Clearchannel open when thanks to the Rush advertiser boycott Clearchannel last made a profit how many years ago?
Bain should be paying tons of interest on Clearchannel’s corporate bonds since Clearchannel is in debt from the Bain buyout. Not making any money and is infact losing money with no end in sight.

Bob, Mike,
The OCC / Fed – Independent Foreclosure Review fiasco, an incomplete “study”, no transparency, foreclosure victims getting $300 – $500 for losing their houses and doing the right thing – and the banks get off with no criminal prosecutions for illegal / fraudulent actions.

Question – what do you see as the result of this banking and DOJ failure? Will this be the next issue in the election cycle?

Problem with Europe is that Germany has the whip hand the Germany does well with austerity for everyone else because capital flees to Germany. EU institutions are hopelessly fragmented and even though France, Italy, Spain, etc. are rejecting austerity, Germany plus the ECB rules. Best endgame I can hope for is that Merkel gets re-elected, protest rise everywhere else, and she decides that her legacy should not be destruction of the euro, the EU and Europe — and takes her foot off the oxygen hose. But I wouldn’t bet the farm. Stakes in Europe are even higher than at home.

Oh, I get it. I just think trying to understand it in terms of his character is less important than understanding where the power really lies in the system, and what a stouthearted politician it takes to defy it. And for whatever reasons, that isn’t Obama.

All the indicators of Obama — from his books, the testimonials of his former colleagues — indicated he was a left-leaning Humanist who was up to the task, that is, up until the years leading up to his campaign for president.

I really don’t know what hope there is left, I feel like we were all swindled. I got swindled after 9/11 into warmongering, and Obama swindled us into accepting corporatist ACA and Dodd-Frank legislation under the guise of progressivism.

Bev, you’re right, this is just a staggering failure. It certainly should be an election issue, but of course the Tea Party right has been skilled at exploiting the failures of Wall Street afflicted Democrats.

Mr. Kuttner: Do you have any observations on the legislation which is being introduced by Brown and Vitter to force higher capital requirements on the zombie banks? Taibbi wrote about it a few days ago.

What just kills you is that occasionally someone–Elizabeth Warren, Sherrod Brown–defines self interest as doing the right thing, and even gets rewarded for it, though not by getting rich. I’d to live long enough to see a president like that…

While it’s understandable why Peterson & his paid lackeys [and there are LOTS of them!!!] wouldn’t “get it,” why can’t others in this area see what you’ve so sensibly laid out?
Stupidity? Inability to break away from traditional thinking? Fear of not being part of [and agreeing with] the “in crowd?

Part of this whole issue is understanding what is going on, then part of it is what actions can we take to make changes.

I think that a lot of people here might understand the power of Pete Peterson, but the rest of the country has never heard of him, let alone that he has committed to spending 500 MILLION dollars getting the media to focus on the deficit and what he wants them to. He hire ‘experts’ he hires PR people to push these experts and they go talk to journalists who don’t have the expertise to tell them they are full of it.

So, on the expert side, what are you doing Bob to actively challenge the Peterson experts in the press? How many journalists who have written articles that make assumptions based on right wing concepts have you contacted to educate and tell them that the views pushed by Prof. X and Dr. Y are wrong and that you want them to revisit the issue?

I can’t speak to the media about this issue because they love only experts (most of whom have been bought by the right). I have found that when I’ve asked our experts to be more aggressive in calling out their colleagues, they have been very reluctant to do so. Why is that? Do you call out your colleagues? Publicly? Why or why not?

Is there any good whatsoever (in the area of economic justice) that can come of the growing anger on the right that manifests as the Tea Party?

Even if their frustration is aimed less at Wall Street and more at the federal government (and particularly at President Obama right now), can their anger somehow be harnessed and redirected to the proper culprits? Can progressives (democrats from the democratic wing of the democratic party) actually team up with the working class Teahadists to somehow form an unholy alliance to take out the banksters?

Is there a chance that it will go anywhere? Though this question may seem peripheral or even irrelevant to the discussion, I, for one, see the issue of imposing some control on these (basically criminal) institutions as absolutely critical in the context of knocking down this idiotic (but nonetheless fashionable) idea of “austerity” as being a part of an overall economic solution (which is so stupid on so many levels that it makes my head spin).

Bob, I’m curious why you don’t see larger protests in the United States like there are in, say, Spain? Crucially, why don’t things like Occupy connect better to a larger Democratic politics, the way right protests connect right into a money and influence chain, as we say with the Tea Party?

I’ve written several pieces exposing and criticizing Peterson. I’ve also criticized several of the Washington Post writers who buy Peterson’s line. It’s much easier for a journalist who works for mainstream media to just go with the conventional wisdom. To paraphrase Keynes, you don’t get into trouble for being conventionally wrong – you get in trouble for being unconventionally right. The publisher and Peterson’s crowd are likely to be social buddies. So you don’t changes these people’s minds by issuing challenges – you demolish them by destroying their arguments.

Hi Spocko I wanted your take on how the NY Times and WallStreet Journal can be showing gains in online readership big enough to cover declines in print readership when the Chicago Tribune is about to go bankrupt again?
The Wallstreet Journal is supposedly making so much money they want to buy the Tribune. I suspect they and the Times are cooking their books but I have no idea where to look to research third party corporations where companies bury their debt.

As someone who has covered the Social Security debate since Peterson first started up, I’m curious what you make of this specific moment. On one hand the need for Social Security and the failure of 401(k)s is becoming common sense; on the other hand Obama has called for chaining the CPI. Where do you think this will go?

Stock market is booming because profits are high — up 30% — and interest rates are low; and a soft economy means the Fed will keep them low. This is the essence of what’s messed up about this economy – not just that the 1 percent gets too much but that the 1 percent gains to the extent that others suffer.

Well if nothing is done about it then we will have another economic collapse. Unless something like computers or the internet comes around to increase worker productivity like computers and the internet did.
In other words I blame Al Gore in part for why the economy did not collapse under Reagan. That and lower oil prices.

Mr. Kuttner: In waging any kind of truly effective campaign to turn the economy around, I see it as absolutely essential that people from across the spectrum be on the same page. The only thing that scares a politician more than losing a corporate benefactor is the fear of being thrown out of office by an angry electorate. In short, how can such a movement be built in the face of a media conglomerate hell-bent on making certain that such does not happen?

I think too many younger people are so discouraged by what they face in their lives that their frustrations don’t turn into a social movement. My friends who try to organize, say, students at community colleges, report that these students who have every cause to be angry don’t have a spare minute what with school, work, and family.
And things really are far more dire in Spain and Greece.

I’d like to direct people to a amazing bit of radio from Sam Seder of a guy, John Mullins, a small business owner from Auburn Alabama explained why he spoke out on how the sequester is hurting his small business at a town hall, and how we can finally get out of the recession and the great outpouring of support he has has received.

Here is the link it is about 26 minutes in to the show it starts. Mullins is the voice of pain from the people who understand economics. He sounds like he is a old time Republican, so he might have some credibility with the right, but the best thing about him is that he comes “from the people” he isn’t “an elite” which the right has been trained to both trust and hate (depending on who is pushing them)

He might get some traction with the people, but of course the experts on the Pete Peterson payroll will dismiss him. What we don’t have is experts on the Paul Krugman, Elisabeth Warren payroll out pushing their ideas.

The Tea Party was either coopted, or invented by the moneyed interests, and in that way they are de-railed before they have any hope for even understanding themselves, and their interests, let alone affecting real change.

The Occupy movement seems to have understood from the start that they would be a target for take-over by the faux-left/faux-progressives of the democratic party and have resisted, so far the temptation to sell out.

Obama stepped on a hornet’s nest when he proposed cutting SS. Big reaction from elders and from Congressional Dems. Could be an important turning point in the party base saying, you don’t get to do this.

We’ve got hard data now in from the IMF in the Eurozone demonstrating how austerity is incredibly counter-productive at least in the short-medium term (leading to higher debt/gdp levels even…) and key studies like Alesina-Ardagna and Reinhart-Rogoff have been thoroughly discredited — but we’re still seeing officials like Rehn and Schauble beat the austerity drum, and the Peterson-types state-side (and their GOP puppets) don’t show any sign of letting up in their fight for austerity at home.

What is there left to do when the money infects the political process so much that destroying their arguments and having stacks of empirical evidence countering them is still insufficient?

Occupy is very tricky. It’s an authentic movement, but is somewhat disconnected from the levers of change. Successful movements of the past–civil rights, labor movement, gay rights, feminists, greens–knew when to stay outside and when to make tactical alliances with politicians. Jury is still out. Tea party is better at this game.

I think the main difference between the working class right-wing and the working class left-wing is that the former blame the government for their problems, and the latter blame corporatism.

In a way, both groups are right of course, but it’s impossible to convince the Teapartiers that we can democratically take over the government and use it as an agent of good. They really and truly hate the federal government, DEEPLY…

What about secondary effects of debt and their cost? Example homelessness means people are not working and contributing to the economy. A person who can’t afford medical treatment with lets say drug resistant tuberculosis is more likely to infect more people thus costing the economy more loss both in medical bills and lost productivity.
A person who can’t get cancer meds because of the government sequester is more likely to die and all the money we spent educating that person goes to naught.
Is there any numbers on this you know of? I would like to read more.

TCU. You are correct about how hard it is to know what the WSJ is really doing reguarding revenue. One of the problems when a much bigger company purchases a entity is that the accounting rule allow them to bury numbers. When asked they simply say, “We don’t have to break out those numbers.”

Entities that own papers that lose money can go on shopping sprees that are designed to help them politically or tax wise.

Right now the Kochs are thinking of buying the Tribune papers, they are a privately held entity and they could lose money on the LA Times and 6 others and still keep them running just because of the political reason.

Contact me off list to talk about other research strategies to consider to get some data and then what to do with it. (spockosemail at g mail.com

In terms of very informative audio content, I highly recommend Ian Masters. A very powerful radio signal in Southern California and always available on the web. Great stuff very consistently on a host of topics.

Yes, and when the federal government is captured and doesn’t deliver enough real help, it’s hard to persuade folks with short memories that it can be a force for good. And just to nail the coffin, our guy proposes to cut Social Security.

What do people in Red States don’t watch Fox News more than Blue Staters do? Does Fox news not lie and spread hate about Dark People and Gays?
Have you never heard people watching Fox News at a bar, work etc say Obama is giving money to African Americans? That health care costs are so high because illegal immigrants go to the emergency room? That society itself is collapsing because of Gay Marriage?

It’s hard to get people on opposite sides of the spectrum on the same page. Things like Brown-Vitter are sources of home. The left and the right joined forces to bring some sunlight to the Federal Reserve. But these, alas, are the exceptions.

Absolutely. This splintering on the “left” (or whatever) is counterproductive at best, stupid at worst. Getting on the same page about the larger issues is essential. Put aside the silly differences and look at the big picture, for chrissakes…

That’s why it’s kind of exciting to see the Republican party get hijacked by the Teahadists.

It gives us hope in the Democratic party that if progressives get loud and obnoxious enough, we can bully the hell out of the corporatists in our party and get them to start listening to us.

Then we’d have hardcore right-wingers representing the Reps against hard-core Progressives representing the Dems — which is a lot more interesting than, as Nader describes it, a duopolistic system with two heads of the same corporate beast as our only choices.

Completely agree. However, teabaggers lost jobs, pensions, homes, etc., just like people at every other point on the spectrum did. The principal reason for this was that the market was gamed by large, criminal enterprises. When I communicate with rightwingers, I emphasize this point repeatedly. Does it get through? Occasionally. Am I going to give up because it’s difficult? Nope.

Yes, exactly. We need to take over even one party. Some primary challenges. Dems in Congress refusing to cut SS and Medicare. When people ask if I support a third party, I respond that I’d like a second party.

And how are we supposed to get on the same page when one group of Democrats insists that we need to keep giving in and stop being idealistic and compromise over and over, and the other group is left hopelessly defending what’s left of our liberal public institutions and values.

Instead of focusing so much on social issues like gay marriage and gun control why don’t we put them aside and focus on what actually matters: the broken middle class, growing inequality, and a totally screwed up banking system.

why don’t we put them aside and focus on what actually matters: the broken middle class, growing inequality, and a totally screwed up banking system.

That’s exactly what I do when I’m communicating with rightwingers. It’s the only door in that I’m able to see – with the possible exception of the bloated national security state. Rightwingers have a certain “big brother” paranoia, as well – for different reasons, probably, but still…

I’m so glad that you have done this. I should have done more research on your experience. The part about who the publisher has lunch with is actually much bigger than people imagine. It isn’t always talked about, but there is self censor ship when it comes to both challenging a source spouting conventional wisdom or embracing someone different ideas.

One of the things that I tell people when they say, “How come nobody was fired for (fill in the blank) being wrong on the war, the economy, the environment) is because they are using the wrong metrics for what it takes to be a pundit. The criteria is more about being “entertaining” or interesting while sounding credible. Also if you are ideologically pure but wrong you will stay employed. Because you weren’t hired to be right you were hired to push an ideology.

So if I was media training people to be experts I would work on them creating clever sound bites, getting financial backing from someone who didn’t care if they were right or wrong. I would hire one of my comedy writer buddies to come up with funny jokes that attack the metaphors of the right and I would train them to play the Sunday morning expert game.

I’d spend more time figuring out how to get them on Colbert and Stewart than in the New York Times. (although I would try and get them in the economist and some esoteric conferences that only other economists care about.)
But that’s me. Sadly only the RW belief tanks like AEI, and Heritage Foundation hire PR people to media train and pitch economists. (The universities should be doing some of this work too but they think that their experts are just great if they get on the News Hour.)

Oh yeah. Lee Fang, has just written a book that has, “A deeper look at the Koch brothers and their family — with new information, including how the FBI monitored the Koch brothers’ father, and how Charles Koch compares himself to the theologian Martin Luther.” Here is the link to the book “The Machine”http://themachinebook.com/

I think that the people selling the Tribune papers need to see why the Koch Brothers buying the paper’s would most likely pan out. But if they don’t care for the community they are serving they will not care about anything other than the price.